This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue is projected using analyst consensus estimates, while expenses (COGS, SG&A, R&D, Interest) are modeled as individual line items based on historical ratios. Depreciation is calculated from a vintage matrix that tracks each year's CapEx depreciated straight-line over its useful life. Working capital is projected using historical turnover days (DSO, DPO, DIO).
FCFF equals EBITDA minus taxes, capital expenditure, and change in net working capital. The terminal value is calculated using the Gordon Growth Model on the Year 6 FCFF. Cash flows are discounted at the Weighted Average Cost of Capital (WACC) using mid-year convention. Enterprise value is converted to equity value by subtracting net debt (total debt minus cash).